2018Client insights and CGI perspectives
on business and technology trends
COMMUNICATIONS
An outlook on trends and priorities based on in-person conversations with business and
IT executives around the world
COMMUNICATIONS
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INFORMING STRATEGY THROUGH CLIENT INSIGHTS
Each year, CGI leaders meet face-to-face with business and IT executives to hear their perspectives on the trends affecting their organizations and the implications for their business. Our experts incorporate the findings and insights from these conversations into our annual strategic planning process and share them with clients through CGI Client Global Insights reports.
In this report, CGI presents the insights and perspectives from our conversations with executives from the communications industry who cite customer expectations in a highly competitive market as key drivers of new strategies and business models needed to stay ahead.We thank the more than 1,400 commercial and government executives across the globe who participated in interviews this year, and we value the opportunity to help drive forward their future strategies and investments.
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Percentage of interviews by region
65%
29%
60%
6%
40%
INTERVIEW INFORMATION
87 clients in the communications sector
Percentage of interviews by role
North America
United Kingdom
EuropeIT leaders
Business leaders
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CLIENT INSIGHTS
INDUSTRY TRENDSDigital transformation remains top trendFor the second straight year, becoming digital organizations to meet customer expectations ranks highest on the list of trends for communications industry executives we interviewed. This is followed by protecting through cybersecurity, and assuring regulatory compliance — both of which are cited more often than last year. In the fourth position is leveraging robotics and artifi cial intelligence to reduce costs and enhance the customer experience. Increasing investment in new products and services to accelerate growth rounds out the top fi ve, with signifi cantly more executives citing this as a top trend compared to 2017.
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CLIENT INSIGHTS
2017All responses
All responses North America Europe
1
Becoming digital organizations to meet customer expectations 94%
80%100%
87%
2
Protecting through cybersecurity 91%
100%87%
76%
3
Assuring regulatory compliance 80%
72%84%
67%
4
Leveraging robotics and AI to reduce costs & enhance customer experience 79%
76%81%
53%
5
Increasing investments in new products & services to accelerate growth 75%
76%75%
13%
2018 top trends
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CLIENT INSIGHTS
BUSINESS PRIORITIES
2018 top business priorities
All responses North America Europe
1
Improve the customer experience 92%
88%94%
88%
2
Optimize today’s operations 90%
92%89%
69%
3
Protect the organization & client privacy as cybersecurity risks mature 86%
92%84%
65%
4
Develop new convergent offerings to replace lost revenues 82%
80%82%
79%
5
Harness the power of data analytics 80%
88%77%
63%
Focus on customer experienceFor the most part, communications executives’ business and IT priorities remain consistent year-on-year, with improving the customer experience continuing as the top priority. Optimizing today’s operations moves up to second position, rising more than 20% as a frequently mentioned priority. The need to protect the business as privacy and cyber risks mature also strengthens signifi cantly compared to 2017. Developing new offerings, products and services continues as a top priority, followed by harnessing the power of data analytics.
We asked both business and IT leaders to provide their perspective on these business priorities. While business leaders said their top priority is developing new, convergent offerings to replace lost revenues and for competitive advantage, IT leaders chose improving the customer experience as their top priority.
Business priorityBusiness leaders
IT leaders
Develop new convergent offerings 91% 75%
Improve the customer experience 89% 94%
Optimize today’s operations 89% 90%
Protect the organization 89% 85%
2017All responses
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CLIENT INSIGHTS
IT PRIORITIES
2018 top IT priorities
All responses North America Europe
1
Digitalize and automate business processes 92%
96%90%
86%
2
Protect through cybersecurity 85%
96%81%
69%
3
Embrace new IT delivery models 84%
92%81%
97%
4
Deliver the benefits of analytics and business insight 84%
84%84%
58%
5
Transform to become a digital enterprise 76%
76%76%
74%
Among IT priorities this year, executives increasingly cite the need to digitalize and automate business processes. Protecting through cybersecurity is now the second top IT priority, reflecting the deluge of security threats and new data protection regulations. Last year’s top IT priority of embracing new delivery models is now third, followed by the need to deliver the benefits of big data and business insights. Becoming a digital enterprise rounds out the top five IT priorities.
Cybersecurity and data privacyIn 2018, cybersecurity and regulation figure prominently among business and IT priorities, increasing in frequency across all industries. In communications, 68% of executives interviewed are focusing on employee training and awareness as the most common response in this area, followed by data asset discovery and tracking (62%) and testing and verification of response capabilities (also at 62%).
2017All responses
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CLIENT INSIGHTS
6% 9% 19% 30%
10% 22% 27% 22%
21%
16%
15%
DIGITAL MATURITYDigital strategies continue to matureCommunications service providers (CSPs) continue to drive digital transformation, with 74% of executives interviewed indicating they have a digital transformation strategy in place, and just 8% beginning to build their strategy.
For those clients with a defined digital transformation strategy, 81% are building, launching or have operationalized a digital strategy focused on the internal organization. Sixty-four percent of executives indicate they are in similar stages with a digital strategy that extends to external partners and suppliers.
Stage of digital transformation strategy implementation
For the entire enterprise extending to our external partners and suppliers
For the entire enterprise, with a scope focused on the internal organization
OtherDon’t knowProducing results Operational Launching Building
Top challenges 2018 2017
1 Cultural change and change management 80% 74%
2 Technology/legacy/agility constraints 77% 79%
3 Re-invent new business models 54% 51%
4 Digital transformation speed 53% 54%
Digital transformation inherently requires a cultural change, and communications executives once again cited it as a top barrier to transformation, along with technology and legacy constraints.
Interviewed executives provided more than one response.
3%
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CLIENT INSIGHTS
20%
CIO and lines of business jointly empowered
Lines of business CIO
Team or role primarily responsible for driving transformation
68% 47% 30%
Interviewed executives provided more than one response.
While executives interviewed in this sector are implementing omni-channel solutions to enhance customer interactions, only 20% have achieved their transformation objectives in this area. Forty percent of executives say their organizations are investigating robotic process automation or conducting proofs of concept, with 23% in progress with transformation. Nearly half of the executives say they are investigating artificial intelligence and machine learning.
This year, 73% of communications executives interviewed say they jointly empower their CIO and lines of business to drive digital transformation, while 52% say they do this through their lines of business. Only 34% say they assign this role to their CIO alone.
24% 16% 23%
Robotic process automation (RPA)
7% 16%14%
13% 8% 43%
Omni-channel
7% 9%
48% 17%
Artificial intelligence (AI) & machine learning
13% 19%
Investigating Transformation in progress Transformation achieved Not for us OtherProof of concept
Stage of technology transformation
3%
DIGITAL MATURITY
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CLIENT INSIGHTS
Investing in transformationSixty-one percent of communications leaders we interviewed indicate that the current-year budget for operations and maintenance of legacy applications and infrastructure has decreased compared to 2017. Modernization spend is rising, with 51% of those interviewed citing increased spend on new initiatives. Of executives who indicate increased investment in new applications and infrastructure, 34% say that spend has increased 10% or more.
Looking to the future, industry executives plan increased investment in data and predictive analytics, omni-channel customer management, and the Internet of Things, over the next three years.
Planned investments in innovation
Now Within 3 yearsCybersecurity
84% 83%
Develop new offers/accelerate time-to-market
83% 85%
Agile IT delivery and infrastructure
82% 78%
Data and predictive analytics
82% 90%
Omni-channel customer management
68% 72%
Internet of Things
60% 67%
INNOVATION SPENDING
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CLIENT INSIGHTS
BENCHMARKING IT SPENDING PATTERNS
The CGI Client Global Insights offer a wide range of benchmarking capabilities to support clients with their business planning. For example, in the area of IT spending, we asked communications executives to estimate their IT spend as a percentage of overall revenue. While the average of their responses indicates that IT spend represents 4% of revenues, 49% of these executives cite that their IT spend represents 5% or more of overall revenue. Average IT investment percentages of revenue in this sector are similar to the overall average of 4% across the industries we examined.
Drawing on more than 1,400 interviews across 10 industries, the CGI Client Global Insights offer numerous benchmarks, including client priorities, investment plans, innovation activities, digital transformation, cybersecurity and data privacy practices, human capital and more. This data can be compared among peers and across industries and geographies. Through our client engagements, we draw upon these benchmarks to support the development of their strategies and publish CGI Perspectives to share the findings.
Total estimated IT spend as a percentage of overall revenue
Less than 1%
1%
2%
3%
Average 4%
5%
6%
7% or more
5%
5%
0%
20%
23%
23%
3%
23%
Data shown for answers providing a specific percentage only.Percent
of revenuePercent
of responses
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CLIENT INSIGHTS
Global average 6.1
Global average 5.7
Global average 5.9
Global average 6.3
Industry average 6.8
Industry average 6.1
Industry average 6.5
Industry average 6.8
This year, business and IT executives interviewed ranked their satisfaction with their own IT organizations based on the 10 key attributes of a world-class IT organization, providing a comparative view of business and IT satisfaction both within and across industries. In the Perspectives section of this report, we share how this data helps communications organizations measure and benchmark their progress toward building a world-class IT organization.
Across the communications sector, executives we interviewed assess their level of satisfaction with internal IT significantly above their colleagues in other industries. As an example, communications industry average scores for cost-effectiveness and alignment with lines of business were 7 and 7.3, respectively, while utilities industry scores for the same attributes were 6.1 and 6.2, respectively. In addition, business executives give their own internal IT organizations higher marks than IT executives give their own organizations across each measure.
Business leader satisfaction vs. IT leader satisfactionScores from 1 to 10, with 10 most satisfied
Providing cost-effective service
Consistently introducing innovations
Delivering on time and on budget
Providing services aligned with the line of business
Business leaders 7.0
Business leaders 6.2
Business leaders 6.6
Business leaders 7.3
IT leaders 6.7
IT leaders 6.0
IT leaders 6.4
IT leaders 6.4
CGI can provide clients with a discussion of all available benchmarking, including each client’s positioning, on topics such as digital maturity, IT budgets, IT satisfaction, innovation investments and more.
BENCHMARKING SATISFACTION WITH THE INTERNAL IT ORGANIZATION
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CGI PERSPECTIVESIn this section, we present CGI’s viewpoints on the insights communications industry executives provided this year.
INDUSTRY TRENDSChanging market dynamics are driving transformationCSPs have been losing their core business to attrition as home phone and long distance services continue to diminish. The core of their network is under pressure to migrate from copper to fiber-to-the-home to deliver the higher speed Internet that is now table stakes. Competition from new Internet players is fierce, driving constant pressure on margins, while new technologies are introduced at an accelerated pace.
At the same time, consumers increasingly are price-sensitive and continually demand new and faster services with better customer experiences. Not surprisingly, 94% of CSP executives we interviewed say becoming a digital organization is their top trend. As a result, CSPs must pursue a multi-pronged approach to:
• Grow subscriber revenues by providing new digital services, such as home security, Internet-based TV and IP video services
• Reduce costs via simplifying and automating core business processes
• Improve the customer experience with self-serve-self-support, intelligent recommendations, and guided omni-channel customer experiences
They’ll need to accomplish all of this while protecting data and systems and complying with ever-changing regulation, as noted strongly in CSP executives’ second and third top trends, respectively.
Becoming a digital organization underpins every aspect of this evolution — from the services and products CSPs offer, to the back-office systems that support those offerings. Since their core business is the network, fiber-to-the-home and 5G are keys to delivering higher speeds and wider access, and to driving their footprint and obtaining more customers.
CSPs also are diversifying through partnerships and acquisitions that span the network options of cellular, broadband, fixed wireless and satellite with penta-play strategies that include mobile phone, VoIP, high-speed Internet, TV/video and next-generation digital services). We see digital transformation as an imperative to achieving profitability across this diverse yet interconnected set of services as well.
Executives also cite the need to use intelligent automation to reduce costs and enhance the customer experience (for example with scripted chatbots and analytics-based automation). They are investigating artificial intelligence in areas such as IoT integration, software-defined networks and network function virtualization, and are looking to use natural language processing for learning chatbots, and speech processing for intelligent agents. Given the speed of technology advancement and consumer demand, executives must continue to move swiftly with such efforts to stay competitive.
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CGI PERSPECTIVES
BUSINESS AND IT PRIORITIES
Competition drives transformationResponding to a highly competitive market driven by customer expectations for seamless, personalized experiences, communications executives we interviewed are looking to agile delivery models to improve time to market, new offerings to replace lost revenues, and data analytics for real-time insights.
Operationalizing these technologies requires IT infrastructures that support such advances. In terms of IT priorities this year, the C-suite and operations management alike see digitalization and advanced process automation as a means to increase efficiency and improve end-to-end workflows. These leaders also are looking to next-generation integrated business support systems/operational support systems (BSS/OSS) for better cost control and speed to market. Industry executives must continue to improve their global IT delivery capabilities through agile development, DevOps, virtualization and cloud infrastructures.
As noted earlier, new partnerships are key to bringing convergent, innovative products and services to market quickly to gain a competitive edge, with artificial intelligence-based and IoT-driven capabilities playing a key role.
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CGI PERSPECTIVES
DIGITAL MATURITY
An expanded ecosystemThe communications industry outpaces other sectors in operationalizing their digital strategies. Leaders recognize that the ability to bring advanced technology-based solutions quickly to consumers is critical to gaining competitive advantage.
As sector leaders invest in 5G networks, fiber-to-the-home and IoT to create new products and services, they are partnering with new players and, in some cases, acquiring providers of complementary services. These new strategies require communications leaders to evaluate their digital maturity across a broader, more diverse ecosystem and, at the same time, protect networks, systems and data from growing and ever-more sophisticated threats.
Change management and legacy technology constraints continue to impact the speed with which organizations can transform digitally, and leaders must act quickly to address these challenges in order to compete.
Jointly empowering CIOs and lines of business to establish and implement digital strategies directly supports their ability to bring new services to market swiftly. To grow the business, CIO IT initiatives must closely align with line of business operational technology (OT) initiatives.
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CGI PERSPECTIVES
Investing to stay competitiveAs operational budgets decline, CSPs look to deliver more with less. Reduced operating budgets are being offset by efficiencies gained through process automation, allowing OPEX to be redirected to cybersecurity, a key spending driver and top focus area for innovation, as well as non-IT network infrastructure costs such as 5G and fiber-to-the home.
Investment in data and predictive analytics, along with investigations in more intelligent automation and artificial intelligence innovation, are focused on improving the customer experience. We foresee continued industry investment in new products, augmented with analytics, to drive the long-term innovations required for delivering next-generation services.
With modernization spend rising for most communications executives interviewed, investments promise to focus on expanding business offerings and increasing operational efficiency. Key priorities include transformation enablers such as digitalization, agile IT models, continuous integration/continuous delivery and full self-service support, as well as cloud and next-generation convergent BSS/OSS solutions.
INNOVATION SPENDING
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CGI PERSPECTIVES
PROGRESS TOWARD WORLD-CLASS IT
Today’s enterprises need word-class IT to compete in an increasingly digital worldWhen there are gaps between business and IT executives, advancing the transformation agenda is challenging at best. To become a top-performing enterprise, there should be continuous interaction between the business and IT sides of the organization that focuses year-over-year improvement efforts on key attributes of successful IT operations.
While IT leaders pursue new ways to digitally transform, positioning IT at the heart of enterprise processes and innovations, they must do more to deliver services that the business deems high-quality and cost-effective. In comparing how communications business and IT leaders assess their satisfaction with internal IT services, alignment is strong and services are perceived as high-value to the enterprise. Across each measure, executives in the communications sector demonstrate higher degrees of satisfaction with IT services than the global average across all industries.
CGI asked 1,400 global leaders about their satisfaction with their own IT operations focused on the 10 attributes that define a world-class IT organization, providing a benchmark among industry peers and a foundation for continuous improvement. The resulting insights identify ways clients can bridge the gaps and align activities of business and IT leaders.
ABOUT CGIFounded in 1976, CGI is among the largest IT and business consulting services firms in the world. Operating in hundreds of locations across the globe, CGI delivers an end-to-end portfolio of capabilities, from IT and business consulting to systems integration, outsourcing services and intellectual property solutions.
CGI helps communications service providers drive down costs while enabling rapid introduction and scaling of new service portfolios, while protecting systems and data. We support continuous modernization and integration to optimize operational and business systems through industry-leading, on-time, on-budget product delivery.
CGI works with clients through a local relationship model complemented by a global delivery network to help clients digitally transform their organizations and accelerate results.
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